Tyson Foods Downgraded at Argus on Inflationary and FX Headwinds

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By Sam Boughedda

Shares of Tyson Foods (NYSE:TSN) were downgraded to Hold from Buy at Argus on Tuesday.

The firm told investors in a note that Tyson is facing inflationary strengthening dollar headwinds.

"We expect inflation and a strong dollar to be headwinds for Tyson. In order to stretch their food dollars, U.S. customers have been purchasing less costly generic products rather than Tyson's relatively expensive goods. Internationally, a strong dollar and an increase in hog prices are likely to cause pork volumes to drop," wrote Argus.

Argus feels Tyson shares are "fairly valued at current prices above $75."

"They are trading at 9.5-times our revised FY23 EPS estimate, below the average multiple of 16.4 for large-cap food processors and toward the middle of their three-year historical range of 6-13. We believe that the current valuation adequately reflects prospects for slowing sales in Tyson's retail business," they said. "Should hog prices ease or export volumes improve more than we anticipate, we would consider an upgrade."

Over the longer term, Argus sees "strong prospects" for Tyson as demand for protein continues to grow and the company invests in new products, e-commerce upgrades, and capacity expansion.